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3/22/14

Here's an interesting story from that plural and peace-loving paragon nation:

As Venezuela’s political crisis deepens, bitter divisions in the South American nation have spilled into Toronto, with a popular local priest receiving threats.

Father Hernan Astudillo of the Parish of San Lorenzo and Radio Voces Latinas, a radio station he founded in 2003, says he received threats by fax, email and phone last week after the church commemorated the anniversary of the death of controversial Venezuelan president Hugo Chavez.

That followed a silent protest by a man who attended a Sunday mass for Chavez on March 9 at the church near Dufferin St. and Lawrence Ave.

Toronto police are investigating the complaint, but no one has been charged.

“It’s okay to disagree and have heated debates, but you can’t intimidate and silence others with death threats,” said Pablo Vivanco, a member of the church, whose family came from Chile.

Via JFowks, (El Pais newspaper's point person in Peru) local radio isthis morning reportingthat police have moved to break up a roadblock in the Southern town of Chala, where informal (illegal) miners have been staging a protest since last Thursday. Same radio stations are also reporting that in the melee with police, many people were injured and two children have died.

But it's not in Venezuela, so don't feel like you have to give a shit.

UPDATE 2: The two children are reported to have died from "toxic gas inhalation". Or in normal person's language, an overdose of teargas.

UPDATE 3: More reports starting to flow from the zone, with most concetrating on injuries suffered by police. One officer in hospital with bullet wound to the abdomen from one report, another has seven protesters and four police officers injured. We also hear that the protesters have now (Saturday morning) re-blocked the main Panamericana highway in response to the crackdown, which means this ruckus isn't going away any time soon.

The Pascua Lama high jinks drag on. Yesterday's episode was a limit date to appeal against a recent ruling handed down by Chile's environmental tribunal that Barrick (ABX) should not pay the U$16.4m fine slapped on the company by the country, but the whole process needs to be re-examined. With just a couple of hours left on the clock, the ABX lawyers did indeed appeal against the ruling and a decision is now expected on that next week.

Or in short: ABX wants to pay the U$16.4m fine imposed upon it and move on. That's probably because it'd mean the current Enviro permit would not have to be scrapped in its entirety and the whole permitting process started again (that would take years to do), whereas if the ruling came under re-examination they might get a "started the EIA process again" nightmare directive. And that matters because ABX wants to get a green light on Pascua Lama again, even though it said in 2013 that it was deferring the project. And THAT in turn matters because ABX now has Chinese big money interested in buying into a minority part of Pascua Lama and providing the cash injection it needs to get the things going again and into production by 2016 (or 2017).

Did you follow all that? Me neither, but all you really need to know is that Citic will write a very large cheque if the Bachelet government allows the project to go ahead. So for ABX the sooner the green light comes the better, which means they want to pay the fine now.

I'm currently making a small investment in the asset* being priced in this way:

I bought a few yesterday and will continue buying today and in the days to come. For what it's worth my absolute max investment in this will be around U$500, so it's not something that'll change the world.

So my question is: TA people, would you buy this chart? And yes, it's a genuine question, not being snarky or anything and I'm interested in any responses offered, though will add that any opinion is unlikely to change my investment thesis on the entry or exit.

3/20/14

It looks kind of ugly too; tear gas canisters flying willy-nilly, cars backed up and skewed off, detritus on the roads, people scattering, general feel of violent and repressive; yep I'd buy all that.

Well I would do if this image hadn't been taken about five minutes before that top one:

So what we saw placed before us this afternoon (by an extremely organized band of opposition Twitterers, because in just a few minutes a dozen repeats of that top photo came past my timeline) was the end of an illegal roadblock protest, with police breaking up about 200 students (that's my best guess max, what's yours?) who had stopped one of the main Caracas arteries from moving.

I'll tell you the true truth: It irks me to be the one to stick up for the Maduro government side of this fubar called Venezuela, because the Venezuelan government isn't playing nice and is censoring news media and is the root cause of the economic underperformance, along with many other sins. I'm not a pro-Maduro person and my support for his government finishes right at the point where I say "He was democratically elected by Venezuelans, who ratified that support in regional elections last December, it's up to Venezuelans to decide who runs the country". And to round off my personal position (because any declaration on Venezuela needs one, sad to say) I'm no fan of the stupids running the opposition there either and firmly believe them to be self-serving and poisonous in the extreme to the country and its potential for healing and eventual progress.

But still, take a look again at the second image above, because although you might get the first one you're not going to be offered the second on your western TV news show this evening. That's not a majority of Venezuelans making a political point, it's a very small minority who are causing havoc to an average working day and being a pain in the butt to vehicle drivers. You'll also note that as soon as the blockade is broken up (no shots to heads, no baton charges) all the drivers really want to do is get moving and on with their days.

Looking at that photo, the conclusion I draw is that Maduro's position of the need to clamp down on minority protesters making an outsized nuisance of themselves is a valid one.

...linked to this mail* below from Steve Todoruk (and I left the Sprott mailer disclosure on the end just for the fun of it, no other reason). It's good primer material and will particularly benefit people starting out in the junior mining markets, BUT there are snippets and ideas for the experts among this audience, too. Not to mention showing other brokerages that Sprott Global is doing a good job of showing expertise to their clients (present or prospective). Now you watch the video, it's published today and it's a good'un (and if you were expecting irony or snark from me after that title line, you were mistaken; credit where due for good material).

I've just put together a talk on my favorite subject on what I believe is the most profitable way for investors to make money investing in junior mining exploration companies. That is to identify the next junior that makes the next good looking significant discovery and after doing the required due diligence to see if it meets my initial criteria, to then get positioned in the stock (whether its by just going in the market buying shares or ideally if the opportunity presents itself by doing a private placement to get that extra warrant as a bonus).

Ive used a number of well known historical examples of juniors that have made a discovery and then gone on to be taken over by the majors making investors lots of money, along with a few examples that didnt work out and then conclude my talk with a couple of the recent discovery success stories.

Our compliance department has approved this talk deeming it to be an educational type of talk and I am therefore allowed to put it on You Tube, our SprottGlobal website and able to distribute it to the public.

I think its a timeless talk and can be given any time.

There are many examples of successful discovery plays but I have just chosen the ones in my talk

WE CANNOT ACT UPON, AND WILL NOT ACCEPT, ANY TIME-SENSITIVE ELECTRONIC MESSAGES, SUCH AS TRADES OR TRANSACTION ORDERS BY EMAIL AND ANY SUCH MESSAGES WILL BE ACCEPTED ON A "BEST EFFORTS" ONLY BASIS. ALSO, FOR YOUR PROTECTION, PLEASE DO NOT SEND ANY IDENTIFYING INFORMATION, SUCH AS ACCOUNT NUMBERS OR SOCIAL SECURITY NUMBERS, THROUGH THE INTERNET.

This communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Sprott Global Resource Investments Ltd, Sprott Asset Management USA, Resource Capital Investment Corporation, its subsidiaries and affiliates. This transmission may contain information that is privileged and confidential. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED. Please notify the sender immediately if this message was transmitted in error. Although this transmission and any attachments are believed to be free of any virus or other defect that might affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus free and no responsibility is accepted by of Sprott Global Resource Investments Ltd, Sprott Asset Management USA., Resource Capital Investment Corporation, its subsidiaries and affiliates, as applicable, for any loss or damage arising in any way from its use. If you received this transmission in error, please immediately contact the sender and destroy the material in its entirety, whether in electronic or hard copy format.

According to weather experts in South America,the El Niño phenom caused by raised water temperatures in the Equator region of the Pacific Ocean will hit the West coast of South America in the next two weeks. North Peru, Ecuador, Pacific coastal Colombia and Central America need to get ready for it because El Niño will normally bring wet weather, but in years such as 1982 or the now infamous 1997/8 event...well, it's nasty indeed.

What with the metals now bottoming and a whole bunch of new crop investors turning up in the sector with more greed than fear in their eyes, IKN take it upon itself to show the neophytes an example of just the kind of bullshit story you people need to avoid like the veritable bubonic plague.

Honey Badger Explorations (TUF.v) is the name, and its NR today hits all the buttons. So potential. Very metal. Honey Badger Doesn't Care says it's found an IOCG on its property...oh sorry, a POTENTIAL IOCG (beats me why the people optioning the property to TUF.v didn't notice it hanging around there before, they tend to be quite big and you would have thought ) with grab samples that have metal in the rock (phew! that was lucky, thought for a moment they wouldn't be able to find a grab sample with metal content) and geologist Dr Fayek (which happens to be an anagram of Fakey, but don't dwell on that) giving it the full geol-speak:

"The hematite-chlorite-carbonate mineral assemblage is (....) consistent with distal, low-temperature, shallow-late type alteration associated with deposits such as Olympic Dam".

Mmmmmm, crunchy goodness*

So anyway, what they don't mention is that to earn its 75% of this new Olympic Dam, Honey Badger Doesn't Care needs to hand over $1.5m in cash to the option holders to begin with (as well as 6.75m shares), then another $1.5m in cash 18 months down the line. That's before the cash it'll need to develop the property, of course.

At its last set of financials (3q13, Sep 30), TUF had 70.88m shares out, treasury of $324k (sadly that's not an M, it's a K) and a negative working capital of $319.4k.

As the stock is currently a 2c stock, raising even that first $1.5m to pay the optioners (before any development cash, before the second payment, before its own corporate burn cash) means Honey Badger Doesn't Care will have to emit 75m shares...which is kind of dilutive dontchathink? Oh, but they didn't mention those things in its NR today, that's the type of detail you have to go look for in the regulatory filings, my fine and brand new shiny sector followers, friends and readers.

But in the end, hey I could be wrong.

*And by way of a sidebar, when IOCG is the subject they always mention Olympic Dam...that comes in the sophomore year of your news release bullshit course, though.

...the number of miners killed in Peru between 2011 and 2013, sorted by the length of time they've been employed in mining:

Now that's a datacrunch. Way more employees die in their first year of employment in a mining company than at any other stage of their career, the frequency is still high in years 1-2, after that it settles down. Data from here

What candles may be held to speed them all?Not in the hands of boys but in their eyesShall shine the holy glimmers of goodbyes.The pallor of girls' brows shall be their pall;Their flowers the tenderness of patient minds,And each slow dusk a drawing-down of blinds.

3/18/14

This hasn't seen much publicity, which is strange, so it's up to IKN to shine the light. According to the country's official Ministry of Energy and Mining figures, in January 2014 Peru's gold output was 11,089.193 kilos, or 356,518 oz in old money if you prefer. That's the lowest monthly number on IKN's database, which stretches back to January 2003.

I'm putting this here more for personal reference than anything else, because I don't want to lose the link and will return to re-read and cogitate on it on many occasions, but that's my problem. Meanwhile, those of you who take an interest in LatAm history, politics and the whole sticky subject of institutionalized racism in the region are strongly advised to find a cup of something warm, click through and read carefully. An extremely insightful piece of writing.

Lille over at "Memory..." has the story of the Chilean who wants to set up his gig on this link. Here's how it kicks off:

A self-proclaimed advocate of Nazism from Chiloé, Godofredo Rodríguez, plans to open a school called the "Escuela de Arte Nazi Presidente General Augusto Pinochet" in Ancud. The school uses a swastika as its logo and has, not surprisingly, provoked a certain amount of indignation in the area.

While Sandstorm manages to carve up the bones of what's left of Colossus Minerals (ex-CSI.to) with sushi-chef-like dexterity in order to dilute the holy fark out of everyone else and leave it with the pie, a more interesting development on the Serra Pelada fiasco is brewing in Brazil's National Congress. Over there the congress member for Para State, Arnaldo Jordy, has put together the necessary amount of congress member signatures (he needed 171, he got 191) in order to createan official parliamentary inquiry into the ever-louder cries of financial fraudaround the mine project. That's kicking off soon, so expect fun and laughter headlines about this snafu all through 2014.

According to all reports it's a complete nest of vipers there, but the main bone of contention is the allegation that back in 2009 Colossus bribed the heads of its COOMIGASP partner at Serra Pelada (the local worker cooperative) to the tune of 50 million Reales (call it U$25m, averaging the forex then and now) in order to hand over an extra 24% of the project and make the ownership of the mine 75% CSI and 25% locals. Also, in the words of that Epoca link up there (translated), "The magazine had access to a report of the Board of Financial Activities Control (COAF), linked to the Ministry of Finance, which tracked unusual financial transactions between the cooperative and Colossus."

Canadian mining companies suspected of bungs to influential South Americans in exchange for mining prospects? Hoodathunkit, eh?

...would you please get on and file your annuals? I'm bored with slicing FVI's numbers into ever thinner slices and as your financials are bound to be a source of entertainment and amusement for one and all (and you're behind your filing date), can you get on with it and show us all?

Thanks in advance

UPDATE: Shocked! Shocked ah wuz! Yup, GORO has made its traditional annual "we're going to late file" move. At least they're consistent, can't fault them on the surprise front-

We down here have heard tell that you up there are getting into quinua (or quinoa, if you insist). We know because we're getting a boatload of dollars more per kilo than five years ago, but that's another story for another day. What we'd like to do is explain just where the grain comes from and can do it via this four minute video:

3/17/14

They sucked. The two issues with Fortuna Silver's (FVI.to) (FSM) 4q13 are:

1) Costs, which came in around $4m $3m hotter than expected at $26.004m. Revenues were already largely telegraphed, so put the two on one chart and they look like this:

Yup revs improved from the last two quarters (due to the hike in San José production, which we knew about), but that costs bar on the right is a new high for the company.

2) The write down, which did this to the net quarter numbers:

That's the second write down in the 2013 period...bit of a habit there. The adjusted net for 4q13 at $3m wasn't much to write home about, either. We also need to ask just why FVI dumped the way it did today, because it smacks of leaky numbers. NYSE volumes in the FSM ticker were particularly strong at 5X the normal.

Anyway, back to the numbers and this paste-out of a part of the 4q13 MD&A throws a little more light on the subject. DYODD, dude.

Fourth-Quarter 2013 Financial Results

The fourth-quarter net loss was $14.9 million (Q4 2012: income $8.5 million), resulting in a loss per share of $0.12 (Q4 2012 earnings per share: $0.07). The loss was driven by a non-cash impairment charge of $10.2 million, net of tax (Q4 2012: $nil) and by a one-time non-cash income tax provision of $7.7 million (Q4 2012: $nil) resulting from the initial recognition of the Mexican mining tax reform.

The Company’s fourth-quarter adjusted net income was $3.0 million (Q4 2012: income $8.5 million) (refer to non-GAAP financial measures). The corresponding adjusted income before taxes was $6.5 million, compared with $8.0 million in the prior-year period. The decrease with respect to Q4 2012 was driven mainly by lower silver and gold prices, of 37% and 26%, respectively, partially offset by higher silver and gold sales resulting from the expansion at the San Jose mine, of 49% and 64%, respectively. Mine operating earnings decreased 22% to $10.4 million (Q4 2012: $13.3 million), and gross margins fell from 35% to 29%, reflecting the impact of lower metal prices, which was partially offset by lower unit cash costs at both our mines. Also contributing to offset the negative impact of metal prices were lower selling, general and administrative expenses which were reduced by $1.5 million.

Cash generated by operating activities, before changes in working capital, was $11.2 million, a decrease of 6% from the prior-year period, mainly because of lower sales, of 4%. Operating cash flow per share, before changes in working capital, decreased 10% to $0.09 (Q4 2012: $0.10) (refer to non-GAAP financial measures).

The basic loss per share for Q4 2013 was $0.12 (Q4 2012: earnings per share $0.07). Operating cash flow per share, before changes in working capital, was $0.09 (Q4 2012: $0.10) (refer to non-GAAP financial measures).

Among other assets, Cabot Corp (CBT) owns the Tanco Mine in Manitoba, Canada. What World Complex has to sayabout what's going on over there is more than eye-opening and should be a big red flag for the whole Canadian mining sector, not just owners of this company's stock. Here's an excerpt to whet your lips:

"The main difference between the new plan and the original plan is that the new plan is considerably cheaper, but risks the lives of the miners (especially given the company's operating record). But what do the lives of miners mean when almighty dollars are at stake?"

“First we pick the person, like the owner of a bakery or a business owner, and then we follow him for two to three weeks and see where he lives, where he goes shopping, who’s with him, those kind of things,” Juan said as he casually scratched the ears of his black mutt. “Then the day comes and you do what you have to do. You ask for ransom — but you try to get it in less than 24 hours.”

And...

One of the factors driving the spree is impunity. Juan described the police as a business expense rather than a real threat. He said the CICPC, Venezuela’s criminal and forensic police, were the most problematic. If they caught him, he said, he might have to pay an $8,000 bribe to be released.

“But the regular police, they charge a lot less,” Juan said. “Really, you just give them whatever and they will let you go.”

And the news is that President Ollanta Humala is back at his term low of 25% after just a month of relief. The February jump came after the Hague boundary ruling, but since then we've seen Humala's government decide to double ministerial salaries, give hefty raises to a whole bunch of the slimeballs that run the national and regional political scene in Peru, then go through yet another forced cabinet change. Worth noting as well that all this comes before the latest round of "we're not approving your crappy cabinet" melodrama at Congress on Friday, which may finish with yet another new PM. Overall 25% is generous methinks, especially now that the real rulers of Peru have decided to attack their head of state and prepare the ground for their next victim.

PS: Nadine's on 27%, her lowest rating ever. That's likely to drop in the next poll, too.

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